Han Chiang High School

E First Semester Mid-Term Test, 2020

STUDENT 'S
NAME

STUDENT 'S
CLASS
NUMBER

______________________________________________________________________

BUSINESS STUDIES 0450

CE1 March 2020
80 minutes
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Marking Scheme

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Question 1
a) Which is the largest business:
i) in terms of sales? ___________________ (A) [1]
ii) in terms of capital employed? ___________________ (C) [1]

b) Define the term ‘business’. [2]

- An organisation that combines factors of production to make goods and services (1) to satisfy
people’s wants and needs (1)

c) Identify and explain two possible reasons why Business D recently failed. [4]
- D was a new business (k). It might have been short of capital, e.g. working capital to finance
start-up operations (ap)
- D’s entrepreneur might have lacked of experience (k). They might not have understood
Consumer preferences for clothes (ap)

d) Identify and explain two reasons why Business C has not grown in recent years. [6]
- Owners / managers might not want to have growth as an objective (k).
They might prefer to keep the business relatively small (smaller than others in the table) (ap)
as this is easier to manage (an)
- The business might be focusing on a segment of the shoe market that is not growing (ap)(k).
They would need to do some marker research to find out about faster growing segments.(an)
Other answers are possible

e) Do you think Business A should take over the cloth supplier? Justify your answer. [6]
Yes, they should takeover the leather supplier:
Backward vertical integration will give assured supplies of quality cloths (k)(ap), which is
used in their clothes. Business A will be able to control cost of its main raw materials (an)

No, they shouldn’t takeover the cloth supplier:

The management of a cloth business is not necessarily the same as a clothe making business.
Business A may have to use capital and mamagement time which could be spent on clothe
making.

Judgement - supporting a decision to takeover or not to takeover and explaining why the
other option should be rejected.

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Question 2
a) What is meant by ‘motivation’? [2]
- Refers to the reasons why workers want to work hard and effectively for their employer (2)

b) Identify two ways, other than time, which can affect employees’ pay. [2]
- Importance of work done / seniority / length of service / experience / output (piece rate)

c) Identify and explain two non-financial rewards that could be used to improve motivation of
Beauty B’s employees. [4]
- Teamworking (k). Training staff to be multi-skilled, so they could do any job in the shop as a
member of the team (ap)
- Employee of the month award (k). Giving status and recognition to shop workers, e.g. those
who get the best feedback from customers (ap)
Other answers are possible

d) Identify and explain two reasons why motivated workers are important to Jess’s business. [6]
- Retailing is a service business (k). Customers must be ‘satisfied’ if they are to return. (an)
Well motivated shop workers will spend longer with each customer and give better advice (ap)
- Expensive to replace staff (k). Improved motivation will reduce labour turnover and reduce
recruitment costs (ap)(an)
Other answers are possible.

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e) Do you think that time rate is a suitable method of payment for all Jess’s employees?
Justify your answer. [6]
Yes:
- Easy to calculate.
No:
- Good and bad workers get the same paid (unfair)
- This system takes time (expensive)
- Need someone to monitor

Question 3

a) Identify two stakeholder groups, other than employees. [2]

Knowledge [2 × 1] – award one mark per stakeholder
Stakeholders could include: customers, suppliers, Government, owners or shareholders,
lenders, community.
Note: Do not accept competitors, managers, directors.

b) What is meant by ‘trade union’. [2]

- Refers to is an organisation which is formed by a group of workers to protect their interest in
workplace (2)

c) Identify and explain two features of BEST’s organisational structure. [4]

Features might include:

- Tall hierarchy [k] / long chain of command [k] as there are seven levels in the organisation

[app]

- Functional departments [k] but also a regional division of responsibility for operations [k] as

split into north south east and west [app]

- Comment on various spans of control e.g. managing director has a short span [k] of 4

employees / supervisors have a wide span of 8 sales assistants [app].

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 Note: Do not award wide/narrow span of control alone as this does not apply to the whole

chart, an employee must be specified.

d) Identify and explain two possible methods that BEST could use to improve the motivation of
its employees. [6]
Methods might include:
- Bonuses / commission [k] for sales assistants [app] as this would encourage them to sell
more to earn extra money [an]
- Fringe benefits[k] e.g. the regional directors / managers could receive a company car[app]
they will feel important / position recognised [an]
- Payment methods e.g. increase wage rate or salary (only allow once)
- Job rotation [k] sales assistants could move to different departments [app] so they are not
bored [an]
- Training/CPD[k].

e) Do yout think the owner is right to say that his workers do not need to join a trade union?
Justify your answer. [6]
Yes:
- As the workers already given training to increase their productivity. - Already satisfied
- By joining trade union, it will increase cost / migh take industrial action to affect the
reputation of the company
No:
- Joining a trade union could improve communication between the employer and the workers
- Reduce employee turnover

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Question 4

a) What is meant by ‘sole trader’. [2]

- Owned by one owner (1) Unlimited liability (1)

b) Identify two features of a sole trader. [2]

- Able to make full decision
- Able to enjoy full profit
- Unlimited liability
- One owner

c) Identify and explain two benefits to Sarah of operating her business as a sole trader. [4]
- She will be able to keep all the profits (k). She has lost her job, so needs a regular income
(ap)
- Sarah is an independent person (ap) - Sole traders are able to make all decisions themselves
(k)
Other answers are possible.

d) Identify and explain two drawbacks to Sarah of operating her business as a sole trader. [6]
Lack of capital (k). She has limited savings which is $7000 (ap) and she will need to pay for
store premises (an).
No experience in operating her own store (k). Working in one is mot the same - and it closed
down anyway so this might suggest a risky venture which could put all her assets at risk (an)

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e) Do you think Sarah should convert the business into a public limited company?
Justify your answer. [6]
Yes, they need additional finance for expansion (k) - e.g. opening new store in another country
(ap)
No, Sarah may not want to lose more ownership / control (k) - she still takes more decisions.
Other answers are possible.
Any decision requires an overall conclusion and more information, e.g. risk of takeover, level
of share price in the country. Answer should give a clear choice to be made and supported

Prepared by: Ong Sue Fynn Checked by: Ms Cheow Phaik Gim

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